President Goes to Indiana

The President wowed the crowd with a down home passion, and Clintonian knowledge of everything stimulus. I was wondering with the debate in Washington being so scewed and muttled over the stimulus, how much support the President actually had.

Then, I saw this poll from Gallup, where the President has 67 percent approval for stimulus. That is not a misprint. What angers many of those on the left and of us fact-based reality folks is that the President could have gotten a lot better deal. But we are here now, and lets just hope that he takes his momentum into each and every "stool of recovery" that have yet to come. Here is the video from earlier

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Senseless (part II)

To continue ...

If Republicans in Congress and even Democrats for that matter, do not see the potential for social unrest not to mention moral cataclysm, then they have severely misinterpreted the mood of the nation.

If we want folks to take risks as an individual, as a small business, or as a corporation; we need to have a social safety net so that essentials are provided in times of need. A really smart guy talked about this at Google a while back.

The part that is so upsetting is that a private business has also determined that these vary programs have the quickest stimulative effect and the largest bang for the buck. Google Marc Zandi's stimulus study at Moody's Economy.com page 3.

Also, if some of these theological conservatives (people who think economic policy is relgious not subject to analysis - a sort of economic faith based initiative) read independent analysis like Peter Orszag's old stuff at the CBO they would find that health care reform is essential to long-term national buget sustainability.

Today, some John Cornyn was on Fox talking about how the stimulus would crowd out private investment (which is idiotdic because there is no private investment to speak of right now), but I have news for the good Seantor from Texas - health care is starting to crowd out private investment.

President Obama said that the tone and the process needed to change in Washington and they do. But the change we seek is from fiction to fact, from immoral to just, from unthinking to thought provoking. And finally to steal a quote from Paul Krugman which applies to all policy matter, "Don’t say that any theory which has good things to say about protectionism must be wrong: that’s theology, not economics."

Senseless

We live in a global economy, with ever increasing risks for individuals because of ever increasing competition for businesses. We have the weakest social safety net in the Industrialized World both in dollar amount and in effect.

Today, in the NY Times this article brought up the specter of the welfare debate. This is unbelievable, unconscionable, and unnerving. As we bailout banks, give bonuses to people from taxpayer dollars, and rebuild nations abroad; can we honestly look at hard working people losing jobs at a 600,000 a month clip, and say, "Hey this feels like welfare, and me being ideologically opposed need to avoid using economic common sense or moral fortitude because I can't upset the base."

Give me a break.

Trajectory

As most people who know a little about economics understand, psychology is very important. I'm not much for the if our leaders talk with confidence in the economy it will improve theory. However, I am a big believer in deflationary and inflationary expectations as rational consumer decisions on a micro level.

If you think cars will be cheaper if you wait to purchase (and so does everyone else), makers of cars will be forced to lower prices because consumers are not spending. If consumers see this lower price as a sign that prices will go even lower, the wait even longer. This deflationary spiral is what deepened and lengthened the Great Depression after and in the midst of the stock market crash, the banking panic, the protectionist trade contraction, the Hoover fiscal catastrophe (he cut spending and raised taxes), and the Federal Reserve that tightened monetary policy.

This deflationary spiral on a micro level is exacerbated by the employment picture and the spending contraction. As people see jobs losses, they begin to worry about their own job security. To mitigate job loss risk, they save rather than spend further deepening the car scenario above, and making further job losses even more likely.

The employment trajectory real complicates the problems we have. My hope was that a good fiscal stimulus (albeit too small) and credit markets brought back to life, could mitigate the downside risks to the economy, and give us life toward December. But now, the employment trajectory looks like a daunting hurdle. Via Brad Delong.

Say It Ain't So A-Rod

A-Rod hit some 50 or 55 home runs when he played for Seattle as a danty young player, so it seemed only logical that him getting bigger had nothing to do with his play throughout the years that followed.

Turns out that line of thought was not that logical. Link. I guess all heros let us down, except fro Tiger Woods of course. 

I just hope Griffey didn't juice, and if he did that would be bad publicity for performance enhancing drugs.

The Real Labor Market Story

The economy shed almost 600,000 jobs last month, and the unemployment rate rose to 7.6%. This number is bad, but when one digs deeper the numbers become much worse. 

First, it is really difficult to find a job if you are unemployed. A 20 week average to find a job is unreal, and is the reason extending unemployment benefits will be effective stimulus (folks will spend every time to feed their family, stay in their house, and drive to interviews - a lot of interviews it looks like). 

The next two numbers are the numbers that really scare me - because that first one was real hopeful for the unemployed and the recently graduated. 

After today's unemployment number the Civilian Employment Ratio is now about 60 percent. Lets be clear about what that number is though. It is the percentage of the population that is employed over the age of 16. (If one discludes students, seniors, and discouraged workers that number rises to about 65 percent Link).  Since about 1990, when the steady state for women in the workforce was reached, we have not fallen much under 62 percent. That 60 percent number is important because we nearly got to 65 percent during the great Bubble Boom of the 1990s. 

The hope that I have is that this Stimulus and many of the long-term growth plans that are on the agenda will set off another great high of Employment and Labor Force Participation. I could be wrong, but it seems to me that with adequate incentives, transportation, education, and eqaulity of opportunity that we could get up near 68 or 69 percent (that is an opinion not a data driven fact). That can only happen if this decline does not become too deep, and if we have another 15 or 20 year period with high growth and no crisises. 

The number that is the most startling is the U-6 unemployment rate which is at an atonishing 13.9 percent. I think this is the part of the debate that goes unnoticed in Washington, that things were pretty damn bad before the recession and financial crisis. As Paul Krugman often says the good years were not that good. 

That number and this analysis were providing by Sudeep Reddy and the good folks over at WSJ Real Time Economics Blog

"The 13.9% unemployment rate — known as the “U-6″ for its Bureau of Labor Statistics classification — includes everyone in the official unemployment rate plus “marginally attached workers,” who are neither working nor looking for work but say they want a job and have looked for work recently, and people who are employed part-time for economic reasons — they want and are available for full-time work but took a part-time schedule because that’s all they could get."

There are a number of data points within labor statistics that I am sure could be inaccurate because of varous measures and behaviors that go uncorrected, but this U-6 number seems to get at some of this problem. If I were President Obama, I would start using the U-6 number in public because many of the folks measured in the U-6 will not show up in the improved unemployment numbers - when that day arrives (such as people moving from part-time back to full-time). 

Nuclear Scientist

I hope he is tethered. Link.